scholarly journals The Impact of Foreign Direct Investment, Domestic Investment, Trade Openness And Population on Economic Growth: Evidence from Asean-5 Countries

Author(s):  
Abdul Rahim Ridzuan ◽  
Muhammad Waqas Khalid ◽  
Nur Izzati Zarin ◽  
Abdul Rauf Ridzuan ◽  
Irzan Ismail ◽  
...  
2017 ◽  
Vol 3 (1) ◽  
pp. 57-68
Author(s):  
Rashid Ahmad ◽  
Kashif Raza ◽  
Sobia Saher

Purpose: This paper estimates the impact of trade openness and economic growth in Pakistan by using time series data from period of 1975-2014. Econometric method was applied to estimate the impact of trade openness on economic growth. Gross fixed capital formation (proxy of investment), Foreign direct investment, Imports, Exports & trade openness (proxy of trade openness to check the volume of trade of a country) is used as explanatory variables while gross domestic product is treated as dependent variable in this study. Johansson co. integration approach developed by Johannes & Jeslius (1988) is used to evaluate the long run relationship among variables in this study. The results suggest that trade openness, imports, exports and foreign direct investment cast have positive impact on economic growth while on the other hand; gross fixed capital formation &labor force has negative impact on economic growth.


2017 ◽  
Vol 6 (1) ◽  
pp. 82-104 ◽  
Author(s):  
Champa Bati Dutta ◽  
Mohammed Ziaul Haider ◽  
Debasish Kumar Das

This article investigates the causal relationship among foreign direct investment, domestic investment, trade openness and economic growth in Bangladesh over the period 1976–2014. Unit root tests, cointegration methods and Granger causality tests in Vector Error Correction Model (VECM) framework are used to investigate the relationships. The results of Granger causality test based on a stable VECM support a unidirectional causality running from foreign direct investment to growth, domestic investment to trade openness, growth to trade openness and bidirectional causality between domestic investment and growth and foreign direct investment and domestic investment. The results support the investment complementarities in Bangladesh. JEL Classification: E22, F1, O40


2020 ◽  
Vol 12 (12) ◽  
pp. 81
Author(s):  
Alina Mihaela Ciobanu

Foreign direct investment flows had increased worldwide over the last decades and many specialists think that there is a strong correlation among trade, FDI, labor force, and economic growth in the receiving countries. Based on available statistical data, we will examine the effects of FDI on GDP growth and the causality relations between GDP, trade openness, labor force, and FDI in case of Romania for the last decades. The ARDL bound testing approach is used to study the existence of a long-run relationship between FDI, trade, labor, and economic growth. Then the error-correction based Granger causality test is used to test the direction of causality between the variables. The results revealed that there is cointegration among the variables when real GDP and foreign direct investment are the dependent variables. Foreign direct investment, trade openness, and labor force are the main determinants of economic growth in the long run in Romania. In addition, the increase of gross domestic product, exports, imports and labor force promote foreign direct investment in the long run.


Author(s):  
Manamba Epaphra ◽  
John Massawe

This paper analyzes the causal effect between domestic private investment, public investment, foreign direct investment and economic growth in Tanzania during the 1970-2014 period. The modified neo-classical growth model that includes control variables such as trade liberalization, life expectancy and macroeconomic stability proxied by inflation is used to estimate the impact of investment on economic growth. Also, the economic growth models based on Phetsavong and Ichihashi (2012), and Le and Suruga (2005) are used to estimate the crowding out effect of public investment on private domestic investment on one hand and foreign direct investment on the other hand. A correlation test is applied to check the correlation among independent variables, and the results show that there is very low correlation suggesting that multicollinearity is not a serious problem. Moreover, the diagnostic tests including RESET regression errors specification test, Breusch-Godfrey serial correlation LM test, Jacque-Bera-normality test and white heteroskedasticity test reveal that the model has no signs of misspecification and that, the residuals are serially uncorrelated, normally distributed and homoskedastic. Generally, the empirical results show that the domestic private investment plays an important role in economic growth in Tanzania. FDI also tends to affect growth positively, while control variables such as high population growth and inflation appear to harm economic growth. Results also reveal that control variables such as trade openness and life expectancy improvement tend to increase real GDP growth. Moreover, a revealed negative, albeit weak, association between public and private investment suggests that the positive effect of domestic private investment on economic growth reduces when public investment-to-GDP ratio exceeds 8-10 percent. Thus, there is a great need for promoting domestic saving so as to encourage domestic investment for economic growth.


2015 ◽  
Vol 7 (4) ◽  
pp. 90-97
Author(s):  
Sani Ali Ibrahim

The economic development performance can be used to measure the economic growth of a given country. In economic analysis, a country can attain economic growth through the growth in national income measurement. However, there were rigorous discussions on the role of foreign direct investment (FDI) on economic growth and continued to be a topic of discussion on the contemporary economy. This paper serves as an extension to the previous empirical studies on the issue by providing some evidence from time series data for the period 1971 to 2013 of Nigeria. The primary aim of this study is to analyze the impact of FDI on economic growth of Nigeria taking trade openness, Gross Fixed Capital Formation and human capital as control variables. To investigate the long run equilibrium relationship, Johansen and Juselius co-integration approach is analyzed, while the speed of adjustment in the short run is analyzed through the use of VECM method. In Nigeria, FDI, GFCF and HK have long run relationship with economic growth. However, the coefficient of ECM in Nigeria is statistically significant at 1% level of significance. Thus, 10.8% of the adjustment is achieved due to the correction of the adjustment speed in a year.


2021 ◽  
pp. 99-106
Author(s):  
Thanh Cuong Dang ◽  
Dang Bang Nguyen ◽  
Thi Hang Trinh ◽  
Thi Thao Banh ◽  
Thi Thu Cuc Nguyen

The study examines the impact of official development assistance (ODA) in constructing road transport infrastructure on Vietnam’s economic growth. The authors select gross domestic product (GDP) to represent economic growth and test the influence of ODA in constructing road traffic infrastructure on Vietnam's GDP. Based on the references and analysis of previous studies, the authors propose an impact assessment model of ODA in constructing road transport infrastructure, Foreign direct investment (FDI), Domestic Investment (VDT) and Labor Force (Labor) to economic growth through GDP as a dependent variable. The regression results show that the ODA had a positive impact on GDP. Moreover, ODA plays an important role in constructing road transport infrastructure on Vietnam’s economic growth.


2020 ◽  
Vol 2 (1) ◽  
pp. 25-34
Author(s):  
Xiuyun Yang ◽  
Muhammad Nouman Shafiq

Economic growth is currently an essential phenomenon for emerging countries worldwide and has gained the researchers' intentions. Thus, the current study aims to examine the role of foreign direct investment (FDI), capital formation, inflation, money supply, and trade openness on the economic growth of Asian countries. The data has been extracted from the twenty emerging Asian countries from 2007 to 2018 using the most popular database named World Development Indicators (WDI). The fixed-effects model, along with the robust standard error, has been used for checking the impact of predictors on the economic growth of Asian countries. The results revealed that the predictors such as FDI, capital formation, money supply, and trade openness have positive association with economic growth, while inflation has a negative association with the economic growth of Asian countries. These findings are suitable for the new arrivals who want to examine this area in the future and for the regular traders who want to develop policies related to economic growth.


2016 ◽  
Vol 38 (2) ◽  
pp. 193-217
Author(s):  
Nurudeen Abu ◽  
Mohd Zaini Abd Karim

Despite the large body of research on foreign direct investment, domestic savings, domestic investment and economic growth, little has been done to investigate the relationships among them. This paper examines the relationships among foreign direct investment, domestic savings, domestic investment, and economic growth in 16 Sub-Saharan African (SSA) countries from 1981 to 2011, using various techniques. The results of VAR estimation and Granger causality tests demonstrate that there is a unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a bidirectional causality between growth and domestic investment as well as savings and domestic investment. The results of the variance decomposition analysis reveal that foreign investment exerts more influence on growth. Savings are more important in explaining domestic investment, growth is more important in explaining foreign investment, and domestic investment is more important in explaining savings. Based on the results of the impulse response analysis, there is a positive unidirectional causality from foreign investment to growth and domestic investment, savings to growth, and a positive bidirectional causality between savings and domestic investment, both in the short and long-run. Although there is feedback causality between domestic investment and growth, the impact from investment is negative in the short-run and positive in the long-run. Thus, policies that encourage foreign investment and savings are required to boost domestic investment and promote growth, and policies that raise domestic investment will lead to higher savings and growth in SSA.


2021 ◽  
Vol 13 (4) ◽  
pp. 1623
Author(s):  
Alnoah Abdulsalam ◽  
Helian Xu ◽  
Waqar Ameer ◽  
AL-Barakani Abdo ◽  
Jiejin Xia

This empirical study has examined the impact of Chinese investments, namely infrastructure, energy, services, other investment sectors, and trade openness on the economies of the 25 Asian and North African countries along with the Belt and Road (B&R) Initiative for a period of 2007 to 2016 using the Johansen Fisher Panel Cointegration Test, Panel Dynamic Ordinary Least Squares (PDOLS) model, and the Toda and Yamamoto technique for testing causality. The findings revealed cointegration among the variables and that the impact of Chinese investments on economic growth in the host countries is positive, but it has a weaker effect, to a certain extent, in all sectors of the host countries while trade openness positively impacts the countries. Furthermore, there is evidence of a unidirectional causality between some FDI (foreign direct investment) economies while the investment in services and other sectors does not cause economic growth in the host countries. Based on the results, the paper proposes that the host countries increase the FDI in the sector of infrastructure, energy, and technology to enhance their economies.


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